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Differences in Tax Cut Proposals Heat Up Divisions Between Bush, Senate Democrats

Aired May 6, 2003 - 16:00   ET


UNIDENTIFIED FEMALE: The president of the United States.

ANNOUNCER: A pitch by the president.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We need aggressive action out of the United States Congress now.

ANNOUNCER: And the response by the Democrats.

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: Because putting money in the hands of people who have to spend it quickly is one of the fastest ways to jump-start the economy.

ANNOUNCER: The fight over taxes heats up. Some so-called Republicans, like Olympia Snowe, stand in the way. We'll speak with a Republican senator under attack by members of her own party for her stance on tax cuts.

The senior senator from Florida makes it official.

SEN. BOB GRAHAM (D-FL), PRESIDENTIAL CANDIDATE: I am, today, declaring that I am a candidate for the president of the United States of America.

ANNOUNCER: Who is Bob Graham and where does he stand on the issues?

Live from Washington, this is INSIDE POLITICS with Judy Woodruff.


JUDY WOODRUFF, CNN ANCHOR: Thank you for joining us.

The tax cut debate inched closer toward its final showdown today here in Washington.

President Bush continued his appeal for public support for larger cuts. And Democrats unveiled their own version of what they call a jobs and growth package.

Meanwhile, lawmakers on Capitol Hill prepare to take action on yet another version of federal tax cuts. Where do all of these plans go from here?

Some answers from our congressional correspondent Jonathan Karl.


JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT (voice-over): Senate Republicans have their plan.

SEN. RICK SANTORUM (R), PENNSYLVANIA: We'll get a great piece of dividend legislation that the president can sign in the next few weeks.

KARL: Democrats have their plan.

DASCHLE: It provides $300 for each adult, $300 each for the first two children.

KARL: The two parties are miles apart, but the Republican and Democratic plans actually have something in common. Both are temporary and neither has the votes to pass. A Republican version would cut the dividend tax for just three years. Moderate Republicans, like Olympia Snowe, say that is a gimmick to hide the real cost of the tax cut, and, amazingly, the author of the proposal agrees.

SEN. CHARLES GRASSLEY (R-IO), FINANCE COMMITTEE: Well, she's absolutely right. It's a gimmick from the standpoint that the best tax policy would be to have the 10-year tax policy that you can under reconciliation. But there's also the anxiety that we all have to recognize because there are not jobs being created.

KARL: Without the support of the moderate Republicans, though, Grassley's plan won't fly. The Democratic plan has even less support. Meanwhile, over in the House, GOP leaders are charging forward with yet another plan, a proposal to cut capital gains taxes that may pass in the House but probably doesn't have a prayer of passing in the Senate.


KARL: So where it ends up, Judy, is anybody's guess. But the expectation is that by Thursday, less than 48 hours from now, the Senate Finance Committee will come up with some kind of a tax plan that would be able to, hopefully, for the Republican's sake, get through the United States Senate. They believe they can do that. It almost certainly will not be the plan they unveiled today, though. There will have to be some significant modifications.

But even once they do this and get this passed through the United states Senate, they have got to go all over again to try to reconcile what they have passed here with what is going on over in the House, which is a much different proposal.

WOODRUFF: Still a way to go from here to there. All right. Jon Karl, thanks very much.

KARL: Sure.

WOODRUFF: Well, this morning the president took his message of lower taxes before a friendly audience of the U.S. Chamber of Commerce. As he did yesterday, Mr. Bush asked listeners to contact their lawmakers and urge them to support his proposal. At the White House a little later he said the Congress should act now to help American workers.


BUSH: ... Congress acts decisively and boldly. I put up a package that will increase the number of new jobs by a million folks at the end of 2004. And I expect them to understand there's a lot of people looking for work, and the burden is on them right now.


WOODRUFF: With me now for more on all this from the White House our John King. John, with all these conflicting plans out there, what is the White House strategy right now? Where are they pushing all this and, realistically, what do they think is the number we're going to end up with?

JOHN KING, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Judy, the one thing that is crystal clear about the strategy is they will not say publicly where they think this is going to end up, because the minute they put out a new number they know that Congress will settle on that and go no higher, and perhaps even lower. What they think is this tax bill is going to be written, as Jon Karl just noted, in the conference committee, once the House and the Senate decide on their competing proposals.

The White House believes in the conference committee, they can get a tax cut, perhaps close to $550 billion. Some here concede privately they'll probably have to take a number that splits the difference, somewhere in the $450-billion-dollar range, perhaps. But they will not publicly commit to that right now.

The focus now is to get as big a tax cut as you can out of each chamber and then hash this out in the conference committee. They are hoping by then that the president has political strength, and that two days in a row now, and more to come, of appeals from the president for people and interest groups to pressure Congress. It gives the president more strength when they negotiate the final compromise. The president today saying one million jobs by the end of next year. He will, of course, be judged, Judy, in November of next year. And how the economy looks then they know here at the White House will determine this president's fate in his re-election run.

WOODRUFF: All right, John King reporting from the White House, thank you, John.

Well, for more on the tax cut debate I'm joined from Capitol Hill by the Senate minority leader Tom Daschle. Senator Daschle, with Republicans in the majority, with your own party divided over what to do, how does your plan that you put out there today have any prayer of going anywhere?

DASCHLE: Well, Judy, I think that there's a lot of indecision within the caucus and within -- I should say within the Senate right now. There's a great deal of concern about the irresponsibility of the president's plan. Keep in mind he phases in for three years this dividend proposal and then eliminates it. Then he sunsets it.

It is about as irresponsible a plan as any we've had before the Senate in recent years. It creates only 600,000 jobs. Only 5 percent of the plan is phased in this year. So, we have a great deal of confidence that as you present the Democratic alternative, a million jobs. We don't break the budget. We've got $152 billion versus $726 billion on the president's side. We think that we provide the kind of economic opportunity and economic plan for jobs and prosperity that is so critical. Theirs is irresponsible and I think that's the difference.

WOODRUFF: But, Senator, one of the main things you are proposing is this $300 wage credit. That is money in people's pockets right away. But the Republicans the White House would argue people can plan better if there's a tax cut they know they can count on. They can plan better, and that is going to lead to generating jobs.

DASCHLE: But, Judy, I would ask you, how can you plan if you are going to phase in something and then eliminate it. What kind of planning is that? We're already talking about sunsets in legislation that was passed earlier, and they are talking about repealing the sunset. There is more uncertainty in this administration's plan for this particular tax cut than I've seen in any tax cut presented since I've been in the Senate. That isn't the way to plan.

What we are saying is you can count -- if you are a family of four and you've got about $50,000 of income, you're going to get about $1600 in child credit, in marriage penalty relief, as well as in a wage credit, $300 for a family of four, $1200 total. So I think that there's a -- you can count on a lot. You know exactly what you are going to get if you are a family of four in South Dakota or any place else.

WOODRUFF: But, Senator, you know you are going up a very popular president coming off a successful war in Iraq. You've got the White House courting moderate Democrats, members of your own party. You must be concerned that the White House is going to pick some of them off.

DASCHLE: Well, I think, if I were the president I'd be concerned about losing the Republicans that apparently have already publicly stated that they are very concerned, and, in fact, some cases, opposed to what the president is proposing. So not only does he not have Democrats, he doesn't even have Republicans in this case that are prepared to support this plan.

And the reason is because it's irresponsible. It really -- we can do a better job on this. We want to work together to get the kind of economic opportunity and the economic prosperity and good jobs that we need. There is no reason why we can't find a way to do this together. I am hoping that we still can find that way.

WOODRUFF: You are the minority leader, of course. But back home in South Dakota, the Conservative pro-tax cut group, the Club for Growth, planning to run television ads against you. There is already building Republican opposition to your run for re-election. Are you worried if you stand in the way of what the president is saying, is there going to be a real boost for jobs that you and other Democrats could be blamed for the economy not coming out of the doldrums?

DASCHLE: Judy, about 50 percent of South Dakotans will get less than a $100 a year in tax relief in the president's plan. I think it's over 70 percent that get less than $150. It's minimal. And, at the same time, South Dakotans have seen water projects zeroed out because the president said we can't afford them.

We've seen deficits go up to record levels, almost $500 billion. The fiscally conservative, responsible South Dakotans are very concerned about the size of the debt this administration has created. A $7-trillion change in our indebtedness, going from a surplus to indebtedness in just two years. They are concerned about that as well.

WOODRUFF: Senator Tom Daschle, the minority leader, it's good to see you.

DASCHLE: Thank you, Judy.

WOODRUFF: Thank you for talking with us.

DASCHLE: My pleasure.

WOODRUFF: We appreciate it.

Well, she is under attack by members of her own party for her stance on tax cut. Coming up, we'll talk with a woman in the political spotlight Republican Senator Olympia Snowe of Maine.

Plus, it's official. Bob Graham's running for president. Will getting into the game late hurt his shots to make it to the White House?


WOODRUFF: Another change today to President Bush's economic team. White House Budget Director Mitch Daniels is resigning. And he may run for governor in his home state of Indiana. Two other top Bush economic advisors, Lawrence Lindsay, who was the president's top economic adviser, and Treasury Secretary Paul O'Neill were ousted in December. Daniels' resignation is effective 30 days from now.

We're back in one minute.


WOODRUFF: The Club for Growth, a conservative pro-tax cut group, has decided to delay the release of some new ads targeting Republican Senators George Voinovich and Olympia Snowe. Both Snowe and Voinovich, along with Senate minority leader Tom Daschle and Democratic Senator Ben Nelson are targets of the group for their opposition to parts of President Bush's tax cut plan. The groups president says that if Snowe and Voinovich stay with their current course, the news ads will be released. Similar ads will begin airing Thursday targeting Daschle, as we just mentioned, and Nelson.

Senator Olympia Snowe is with me now to talk about this tax battle going on on Capitol Hill. Senator Snowe, it's good to see you.

SEN. OLYMPIA SNOWE (R), MAINE: Nice to see you.

WOODRUFF: I think you've been called every name in the book, at least by some in your own party. They are fingering you for being the obstructionist, helping to hold up the president's centerpiece of his economic recovery. Is that a role you're comfortable in?

SNOWE: Well, I have to obviously do what I think is right, not only for my state, but for my country. And this comes from years of working for a balanced budget and obviously eliminating deficits. We understand why we're in the situation we are today. The question is, how quickly we can return to balanced budgets, and that's what I'm striving for.

And I think we have to balance out those policies between what the president desires and lowering taxes at this time, which we need to stimulate the economy, and I agree with him. But at the same time, not excluding our primary goal, ultimately, and that is to return to balanced budget. So I hope we can negate the name calling through these 30-second ads that I don't think are constructive or productive in this debate.

WOODRUFF: Senator, you're supporting a tax cut about half the size of what the president originally wanted. Yesterday, he again called that size cut an itty-bitty tax cut. Have you heard from the White House through all of this?

SNOWE: I've had numerous discussions with the White House, and, obviously, including the president several weeks ago. And I think they understand, you know, the differences that we have on this issue. I agree with the president's stimulus plan. I think we have to jump- start the economy. I couldn't agree with him more. His base package does do that for $350 billion.

It's a question of whether or not we should include long-term growth plans like a dividend plan that's going to have to use more deficits to finance that plan. And that's where I have this disagreement. I should say $350 billion is not a little-bitty tax package. It's a robust, significant tax package. In fact, if you compare it with previous tax cuts, it's probably one of the third largest in history, the first largest being 2001.

WOODRUFF: You're willing to go along with a scaled down version of the dividend tax cut. You obviously also want to give some money to cash-strapped states. Can you do all of that and keep it under $350 billion? SNOWE: Well, you could including the fiscal assistance to states within the 350. I think the question, if you get a scaled back version of the dividend plan like $1,000 exclusion that would help 80 percent of all taxpayers by eliminating the tax on dividends by a $1,000 exclusion. And we could find some appropriate offsets up to $50 billion for that type of proposal. I have said that above 350 we need to finance it through offsets, through legitimate offsets, obviously not gimmicks.

WOODRUFF: But if it's that small, do you think you can get Republican majority support in the Senate, in the White House?

SNOWE: That's a good question, Judy. And, obviously, they have a disagreement on that score at this point. But I hope that we can engage in a constructive dialogue. And it remains to be seen as to where we stand on this issue.

WOODRUFF: Senator, you've said you would not consider leaving the Republican Party as your colleague Jim Jeffords chose to do a couple of years ago. Why not?

SNOWE: Because I feel deeply rooted in the principles, the traditional principles of the Republican Party. And that is achieving fiscal responsibility, greater individual opportunity. And, frankly, I'm reminding, you know, my party of our historic roots, which, yes, it is to lower taxes, but it also is to achieve balanced budgets. And we shouldn't, you know, accomplish one and abandon the other. These are not mutually exclusive goals. So I'm a little perplexed as to why we're in this debate today.

WOODRUFF: But you have come under withering criticism for holding your ground on that.

SNOWE: I know, that's what's amazing. It's what's confounding. And if you ask the American people, you know, how best to address a nation's economy, overwhelmingly people will say, we have to cut deficits. They understand intuitively what we are facing over the next decade with social security retirees and the Medicare program. These issues are, you know, colliding in this next decade. And so I think we need to address that as well.

WOODRUFF: All right. Senator Olympia Snowe of main standing her ground against the mighty White House and the mighty Republican Party. Thank you, Senator.

SNOWE: Thank you, Judy.

WOODRUFF: It's always good to see you. We appreciate it.

SNOWE: Thank you.

WOODRUFF: Campaign news from around the nation just ahead. The sounds of silence on the campaign trail. Next, why John Kerry decided to cancel a planned speech tomorrow.

(COMMERCIAL BREAK) WOODRUFF: Checking the headlines in our "Campaign News Daily." A throat ailment has forced John Kerry to cancel several campaign events, something some of us can identify with. Senator Kerry sounded hoarse during Saturday's televised debate. He has decided to cancel a planned speech tomorrow so he can rest his voice.

Out west, California GOP Congressman Darryl Issa is pouring big money into the effort to recall Democratic Governor Gray Davis. The "Los Angeles Times" reported that Issa plans to make a six-figure donation to assist recall organizers. Two other recalls groups already report gathering 100,000 voter signatures. More than a million signatures will be needed to force a recall election.

INSIDE POLITICS continues after a short break.


WOODRUFF: Senator Bob Graham of Florida made it official today. He is a candidate for the Democratic nomination for president.

CNN's Candy Crowley is following the story in Miami Lakes, Florida.


CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT (voice-over): Sidelined by January heart surgery, Bob Graham is late to a game crowded with players. He hopes to find running room in homeland security.

GRAHAM: I know firsthand as the former chairman of the Senate Intelligence Committee how little this administration has done to provide real security at home, while it's directed its attention away from the war on the terrorism abroad.

CROWLEY: Bob Graham is running for president. The first question is usually, who is Bob Graham? They don't ask that in Florida.

BILL ADAIR, "ST. PETERSBURG TIMES": He is the most prominent and popular politician in the state.

CROWLEY: He is what they call a resume candidate, the most experienced politician in the '04 crowd. A state legislature, a two- term governor, now the senior senator. Since 1966, he has been unbeatable in the state of, are you listening Democrats, Florida. He says he's from the electable wing of the Democratic Party, which is to say a moderate. He's also hard to predict. A Democrat who voted yes on the first Gulf war when most of his party said no, and when most of his party voted yes on the second Gulf war, Graham voted.

GRAHAM: Instead of pursuing the most imminent and real threat, international terrorists, this Bush administration chose to settle old scores.

CROWLEY: He's a well-respected, solid Democrat, but his compulsion for recording the minute-to-minute minutia of his life is believed to have cost him the VP slot in 2000. Whatever his quirks, Graham is a candidate loaded with gravitas who couldn't light up a room with a torch. Absolutely no pizzazz.

GRAHAM: I am an optimist. The best days of America lie ahead.

CROWLEY: Still, in some ways, that ordinariness is part of Graham's huge success in Florida. See these people? Graham has spent a day working the jobs of most of them.

UNIDENTIFIED MALE: He road with me to Tallahassee and unloaded a truck up in Tallahassee.

CROWLEY: His Harvard-educated lawyer learned how to be a regular person. He began what he calls his workdays in '78 when he was running for governor. As he began, only 3 percent of Floridians said they'd vote for him. One hundred workdays later he won the election.


CROWLEY: These are full workdays for the senator and he has kept it up all throughout his political career. This Friday, work day number 387 will occur in a classroom. Graham will serve as a teacher in New Hampshire -- Judy.

All right, Candy Crowley reporting live for us from Miami Lakes. Thanks a lot. And, Candy, we're going to ask him tomorrow when we interview him right here on INSIDE POLITICS about that no pizzazz line.

When we return, some strong words from the senior senator of West Virginia.

Plus, we'll check in with CNN's Rhonda Schaffler for a wrap-up of the day on Wall Street.



WOODRUFF: Tough talk today from Senator Robert Byrd. The Democrat from West Virginia today criticized Mr. Bush's appearance on an aircraft carrier last week to declare the end of major combat in the war in Iraq. On the Senate floor just moments ago, Byrd said, quote, "I do question the motives of a desk-bound president who assumes the garb of a warrior for the purposes of a speech." The senator made these remarks to a largely empty Senate chamber. No response yet from the White House.

That's it for INSIDE POLITICS. I'm Judy Woodruff. Thanks for joining us.

"CROSSFIRE" starts right now.


Bush, Senate Democrats>

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